Prime between a large pipeline and actual execution

The main Lahav article framed Prime as one of the group’s biggest pockets of optionality. This continuation isolates the narrower question: how that optionality is supposed to turn into operating cash, rather than remain a market-value story or a presentation line.

By the end of 2025 the dissonance was already visible. Lahav held 43.65% of Prime, and that stake was carried at ILS 140.7 million. But only ILS 45.1 million of that amount reflected Lahav’s share in Prime’s net assets, while ILS 96.6 million came from fair-value adjustments recorded at acquisition. At the same time, the market value of the Prime shares held by Lahav stood at ILS 285.7 million, while Lahav’s share of Prime’s 2025 loss reached ILS 14.8 million. The market is already paying for the story. The financial statements still do not show a mature business.

That gap is the core of the thesis. Prime already has a real operating base, and it already has a very large project pipeline. But between those two points sit financing, equipment, EPC execution, grid connection, and then the harder test of showing that in 2026 and 2027 revenue actually flows through EBITDA and FFO into cash. Without that sequence, Lahav is still holding an expensive option.

The value is booked, but not yet monetized

The first sign that Prime is still in proof mode sits directly inside the investment note. Lahav’s carrying value in Prime is meaningful, but it is not currently backed by strong recurring profitability or by a large net-equity base at Prime itself. Lahav’s share of Prime’s net assets at year-end was only ILS 45.1 million, and the gap up to ILS 140.7 million came from fair-value adjustments created when control was acquired. That is not an accounting defect. It is simply a reminder that a large part of the value still sits in deal structure and forward expectations, not in economics already delivered.

That picture becomes sharper when looking at Prime’s own 2025 results. Revenue rose to ILS 28.6 million, yet Prime still ended the year with a loss of ILS 33.9 million, and Lahav’s share of that loss reached ILS 14.8 million. This does not yet look like a cash engine that can carry the story on its own. It looks like a platform still being built.

Even the jump in the operating base is not a simple story. One of the main reasons the operating portfolio expanded was the December 2025 acquisition of a portfolio of 161 operating solar systems with total capacity of 53.7 MW DC, at a total cost of ILS 217 million. At closing, ILS 30 million was paid plus working-capital adjustments of about ILS 7.8 million, while the transferred entities continued to carry about ILS 187 million of non-recourse debt. Prime estimated that before any material upgrades this portfolio would generate roughly ILS 26 million of revenue and ILS 16 million of EBITDA in its first full year. In other words, part of the increase in operating MW came through a leveraged acquisition that starts from a reasonable but not exceptional return profile and still needs upgrading.

The pipeline is larger than the operating base

This is where the central tension sits. In the annual presentation Prime shows an end-2025 base of 166 MW connected and operating, against 708 MW under construction and in pre-construction, plus another 303 MW in licensing and initiation. Storage looks similar: 2.1 GWh in total, of which 1.58 GWh is under construction or in pre-construction and another 0.53 GWh sits in licensing and initiation. This is no longer a small pipeline. It is an execution load.

The critical point is not just the size of the pipeline, but the gap between that pipeline and what is already connected. Prime itself says it has started constructing a dual-use cluster of about 252 MW for connection in 2026-2027. That means the core question for the next two years is no longer whether projects exist. It is whether those projects move from presentation material into the grid, receive tariff or market exposure as planned, and start paying back capital.

That is why 2026 and 2027 look like proof years, not harvest years. Once the operating base is still relatively small and most of the value sits in systems under construction, storage facilities, and projects that have not yet cleared the full chain, every small delay becomes material. A permit delay, a connection delay, a procurement problem, or a financing shift does not postpone a side story. It postpones the moment when optionality turns into cash.

Financing has not cleared every hurdle

The superficial reading is that financing is already more or less solved. That is only partly true. Prime currently has two different financing layers around the dual-use projects, and it is wrong to treat them as if they were already one fully closed package.

The first layer is a binding financing agreement signed in May 2025 with a lender consortium led by Bank Leumi, for credit facilities of up to ILS 667 million. The second layer is a non-binding memorandum of understanding from January 2026 with Mizrahi Tefahot and Bank Hapoalim, for up to ILS 1.56 billion. That MOU relates to 23 to 25 facilities with aggregate capacity of about 160 MW DC and around 1,000 MWh of storage. It still requires due diligence, internal approvals, a detailed financing agreement, and project-level coverage tests.

So the more accurate description is that Prime has a financing architecture, not fully closed financing. One layer is binding. A second layer is described as expected but is still unsigned. On top of that, Prime explicitly says that over the next two years its energy group companies will need to raise additional senior project financing in the hundreds of millions of shekels for projects that are still in licensing and initiation.

This is where the real bottleneck shows up. Non-recourse sounds reassuring at the parent level, and to some extent it is. But at the project level it actually hardens the test. Each asset has to clear feasibility work, coverage ratios, permits, EPC arrangements, and equipment procurement before it becomes financeable. This is not cash sitting in the bank waiting for Prime. It is cash that each project still has to earn from lenders.

Storage is now a deadline, not just upside

If financing is the frame, storage is the clock. The March 2026 binding framework agreement with Hithium already turns the storage discussion from something strategic into something operational. The agreement covers BESS procurement of up to 2 GWh at a total cost of up to $200 million over three years. More importantly, it includes a minimum commitment: 1 GWh during 2026, of which 800 MWh must be ordered by August 31, 2026 and another 200 MWh by October 31, 2026.

That changes the entire conversation. Up to March 2026, storage could still be discussed mainly as an upside layer that makes the dual-use pipeline more attractive. Once the procurement agreement was signed, there was also a live order deadline, a 5% advance payment on the minimum quantity within 30 days of signing, and a pricing mechanism that is fixed for 2026 orders at $85-$100 per kWh but becomes linked to lithium carbonate pricing for later orders. If financial close, permitting, or buildout pace move out of sync, storage can quickly shift from a return enhancer to a source of pressure.

That also explains why Prime links the Hithium agreement directly to the 252 MW dual-use program alongside about 1.3 GWh of storage, with an estimated investment of around ILS 900 million and expected first full-year revenue of about ILS 170 million. Without storage, a large part of the project economics does not exist. With storage, Prime now has to execute on procurement, financing, and connection at the same time.

Delek Properties and Edeka add optionality, and more load

The story does not end with the core pipeline. The opposite is true. During the first quarter of 2026 two more threads were added, both of which broaden the platform and also broaden the execution burden.

The first is the MOU with Delek Properties. This is a non-binding memorandum to build storage facilities at fuel-station and commercial sites owned by Delek Properties, a company controlled by the same controlling owners behind Prime. According to the disclosure, the relevant footprint is about 65 sites with estimated potential of up to 1.5 GWh. Prime has six months of exclusivity, then up to 12 months of feasibility work after a frame agreement would be signed, and then 36-month option periods per selected site. If the full potential is realized, the company estimates about ILS 930 million of investment and first full-year revenue of ILS 227 million with EBITDA of ILS 107 million. That is a large option, but at this point it is still only an MOU, and it is also a related-party situation. So it does not solve the execution question. It adds to it.

The second thread is Edeka, and the picture there is more concrete. Unlike the Delek Properties case, this one already includes a binding framework agreement, PPAs, roof-use rights, and an EPC agreement with a local contractor. Stage A covers 92 supermarket roofs, around 12.7 MW of potential capacity, estimated investment of about EUR 11.4 million, and non-binding discussions for local financing of around EUR 8 million, leaving expected equity of roughly EUR 3.5 million. There is also already a non-binding Stage B discussion for around 300 additional properties and about 45 MW.

The key point is that Edeka is not Prime. It sits inside Lahav Energy Europe. But at Lahav group level it is still part of the same energy execution picture. Lahav’s energy story in 2026 is not narrowing into one clean line. It is spreading across dual-use, storage, acquisitions, fuel-station sites, and German commercial roofs. The wider the map gets, the more important it becomes for the core, meaning Prime in Israel, to start proving actual connection and operation instead of just adding future layers.

What has to happen next

That leads to a simple conclusion: Prime no longer needs to prove that it has ideas. It needs to prove sequence.

The first sequence is financing. The MOU with Mizrahi and Hapoalim has to become binding, not just to raise confidence but to align actual build pace with equipment procurement. The second sequence is storage. If Prime misses the Hithium order schedule, the entire dual-use thesis starts to slip exactly where it is most sensitive. The third sequence is connection. Holding 708 MW under construction and in pre-construction is not enough. The market will need to see assets move into commercial operation and start producing electricity, revenue, and EBITDA.

The fourth sequence is discipline. The December 2025 acquisition, the Delek Properties MOU, and the Edeka deal can together create a much broader platform. But if the core still does not convert into cash, every additional expansion move only raises the question of whether Prime is building a platform or accumulating obligations.

Conclusion

Prime is no longer a small side story inside Lahav. It has an operating base, a large pipeline, access to lenders, and several additional deal threads that could broaden the group’s energy platform even further. But as of the end of 2025 and the start of 2026, the largest part of the thesis still sits before the point of commercial operation.

For investors reading Lahav through Prime, the implication is clear. Today the value exists in three different layers: market value of the stake, accounting value that is still partly supported by acquisition adjustments, and a very large operating option around dual-use and storage. The missing layer is cash. Until that layer shows up, it is hard to treat Prime as a proven engine.

In that sense, 2026 and 2027 will need to answer very simple questions. Does the second financing leg close? Is storage ordered on time? Does the pipeline actually connect to the grid? And do the new acquisitions and initiatives strengthen the core rather than distract from it? If the answer is yes, Prime may justify even more than the value implied today. If not, the gap between a huge pipeline and actual execution will remain the central problem in the story.